Layne’s Chicken Fingers, a Texas chicken restaurant, is paying teens more than $50,000 a year in managerial positions, to combat labor shortages across the country. Garrett Reed, the CEO of the small food chain, is using the strategy to keep workers in their late teens and early 20s from leaving for bigger companies who pay can afford to pay better wages.
According to Reed, Layne’s Chicken Fingers has made it a point to train teen workers to run the stores, because it’s been difficult to find and afford more experienced workers. The chick chain is six-stores strong across Texas, but Reed says it’s been hard to keep them all open with the lack of stable labor.
“We’re so thin at leadership that we can’t stretch anymore to open more locations,” the CEO told the Wall Street Journal. “I’ve got a good crop of 16- and 17-year-olds, but I need another year or two to get them seasoned to run stores,” Reed admitted that many workers have left for bigger companies like Walmart and McDonald’s.
Garrett Reed is also trying to expand Layne’s Chicken Fingers, but it’s been nearly impossible due to labor shortages. He claimed he has deals to lease four additional locations, but that he won’t sign them because he’s afraid he won’t be able to staff them.
“The biggest challenge for small companies to grow right now is your labor force,” Reed said. “We’d be growing at twice the rate if we had more people.”
The big problem for Layne’s Chicken Fingers is paying wages equal to other big companies, while simultaneously staying profitable. Many large corporations can eat the cost of a higher minimum wage, but that’s not the case for smaller chains.
“There’s only so much I can pay and remain profitable without raising prices too much,” Reed said. The current strategy is to take youthful and hard-working 16- and 17-year-olds and train them to run future stores. These positions come with a hefty paycheck of over $50,000. It’s the only way to keep the teens from ditching work for alternative options, like collecting unemployment or leaving for a bigger company.
Layne’s Chicken Fingers is not the only restaurant suffering from labor shortages. The entire hospitality industry is finding it hard to stay open, especially as Covid-19 restrictions lift and customers are eager to spend their money. Despite a booming clientele, job openings in the food and hospitality industry rose by 349,000 according to the Bureau of Labor Statistics. To lure workers, owners have had to increase wages … a lot.
The labor shortage has been linked to child-care concerns, fear of catching Covid-19, and generous federal unemployment benefits. Companies are finding it hard to compete with unemployment claims, that pay an extra $300 per week.
Despite millions of jobs available, 3.5 million Americans still claim state unemployment. In April, there were 9.3 million job openings, and still, weekly jobless claims have risen in the last week. Economists hope that the labor market will strengthen after the federal unemployment benefits program ends. Joe Biden says the program will finish in September, and many workers will likely need to go back to work to support their families.
Before the program ends, large food chains like McDonald’s and Chipotle have increased wages and created programs to incentivize long-term work. Managerial training and franchise development programs have encouraged employees to continue working through the pandemic.
Smaller chains, like Layne’s Chicken Fingers, are finding it hard to compete. Still, expansion is on the table.
Garrett Reed told D Magazine in May that he plans to open 100 to 120 franchise locations across Texas by 2028, a bold goal while struggling to find labor. Perhaps in September things will get back to normal and Reed’s plans for expansion will be underway.